Jurisprudentiol - Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Liability accrued to proprietorship concern cannot be said to have evaporated when entire assets belonging to it came to be vested to partnership firm: HC

ONE M.L. Narayana was carrying out business as proprietor in the trade name and style of "Shree Ganesh Forging Company" and committed default in payment of excise duty. Proceedings were initiated against the proprietor who subsequently died in the midst of the proceedings. According to the department, the factum of death of the said proprietor was not communicated and the authority proceeded to decide the matter imposing the duty and the penalty upon the said proprietor.

One of the sons of the said deceased preferred an appeal before the CESTAT and subsequently made an application for dismissal of the said proceeding on the ground that the appeal has abated.

The Tribunal dismissed the appeal.

Income Tax

Whether income arising to stockiest by winning prize on unsold lottery tickets is necessarily 'income from other sources' - YES: HC

THE Assessee is appointed as a stockist by the State of U.P. on payment of such commission on the sale of lottery tickets under the terms and conditions provided in the agreement. Assessee gained income by winning the prize on unsold lottery tickets as a business income. AO treated the same as income by way of winning prize money on lottery tickets and assessed u/s 115BB at the rate of 40%. Assessee also claimed loss towards unsold tickets. Under the agreement, assessee was to collect the prize of winning tickets, out of the tickets sold by him and shall make the payment of prizes of winning prize uptoRs.1,000/- on the basis of the left hand counter foils kept with him. A sum of Rs. 1.30 lacs had been determined as value of the prize winning tickets payable by the assessee to the prize winners. However, a sum of Rs. 1.23 crores had been paid to the winners and the balance amount remained unclaimed and unpaid to the winners were shown as a liability. AO sought the details of such tickets against which the amount had been paid and details of those winning tickets against which the amount could not be paid to the winners. On non-furnishing of such details, AO invoked provisions of section 145(2) and made addition u/s 68.

The issue before the Bench is - Whether income arising to a stockiest by winning the prize on unsold lottery tickets is business income or income from other sources u/s 56(2)(ib). And the answer is 'income from other sources'.

Service Tax

Activities of Maharashtra State Seed Certification Agency cannot be considered as mandatory and statutory functions provided by sovereign/public authority and, therefore, benefit of Circular 89/7/2006-ST is not applicable - demand upheld for normal period - interest payable but penalties set aside: CESTAT

APPELLANTS are engaged in the activities of technical inspection and certification of seeds produced by seed producers in Maharashtra State as per the Seeds Act, 1966 (Act No. 54 of 1966) and the Seeds Rules, 1968. They are an Autonomous Body registered as a society under the Societies Registration Act, 1860. The appellants charge fee for the said certification as prescribed under the said Rules.

A new Service titled as "Technical Inspection and Certification Service" became leviable to Service Tax with effect from 1.7.2003. As per Section 65(108) of the Finance Act, "Technical Inspection and Certification" means inspection or examination of goods or process or material or any immovable property to certify that such goods or process or material or immovable property qualifies or maintains the specified standard, including functionality or utility or quantity or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels.

See our Columns Monday for the judgements